A
hearing aid business which is a sole proprietorship owned by an Illinois
resident is located in Terre Haute, Indiana. The office of State Farm Fire and
Casualty Company in West Lafayette, Indiana, issued a comprehensive general
liability policy to that owner at the Indiana business address. Later, the Illinois
corporation of Bridgeview Health Care Center, Ltd., the named plaintiff here,
complained of unsolicited faxes sent by the hearing aid business, and of
alleged statutory violations, as well as damages incurred through loss of toner
and ink.

An
action to determine whether the State Farm policy provided coverage against
these claims was initiated in the circuit court of Cook County in 2010.
Bridgeview sought a declaration that State Farm had a duty to defend and
indemnify the insured under the advertising injury and property damage
provisions of the policy, while State Farm sought a declaration of noncoverage.
Although State Farm acknowleged that Illinois law provided coverage, it also
argued that there was a conflict with Indiana law and that a conflict-of-laws
analysis should be undertaken. This would reach to the issue of which state had
the most significant contacts with the dispute, and State Farm argued that the
most significant contacts were with Indiana. State Farm conceded that there
were no Indiana state court cases on the coverage issue, but argued that two
unreported federal district court decisions from the Southern District of
Indiana had “predicted” that the Indiana Supreme Court would find no coverage
and that this circumstance justified finding a conflict. Relying on a 2011
decision of the Illinois appellate court, the circuit court held that such a
“prediction” does not demonstrate a conflict, and that there was no need to
reach the issue of significant contacts.

In
this decision, the Illinois Supreme Court affirmed the circuit court and
reversed the appellate court, which had reached a contrary conclusion. The
supreme court said that such federal district court decisions, in and of
themselves, cannot establish a conflict between the law of different states,
since a “predictive” judgment is not, in fact, state law. State Farm failed to
meet its burden of demonstrating a conflict.